# Southland Holdings, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Southland Holdings, Inc.](/companies/slnd.md) (CIK 1883814)
- Form: 10-Q
- Filed: 2023-11-13
- Accepted by EDGAR: Nov 13, 2023, 21:45 ET
- Period: 2023-09-30
- Accession: 0001558370-23-018856
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1883814/000155837023018856/slnd-20230930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1883814/000155837023018856/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $312.5m | us-gaap:Revenues |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $844.2m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $282.9m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $829.5m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $29.5m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $14.7m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2023-07-01 to 2023-09-30 | $15.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-01-01 to 2023-09-30 | $47.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $14.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$32.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $6.2m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $13.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $5.4m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | −$11.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $3.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$13.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.08 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.29 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.08 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.29 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 47,872,042 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 46,771,938 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$36.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $7.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $32.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $908.9m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $1.18bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $548.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $913.8m | us-gaap:Liabilities |
| Long-term debt | at 2023-09-30 | $261.2m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $47.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $253.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 41,550 characters.

The following discussion and analysis contain forward-looking statements relating to future events or our future financial performance, which involve risk and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. Please see the discussion regarding forward-looking statements included under the “Cautionary Note Regarding Forward-Looking Statements” section for a discussion of some of the uncertainties, risks, and assumptions associated with these statements.

The following discussion and analysis present information that we believe is relevant to an assessment and understanding of our condensed consolidated balance sheets, statements of cash flows, and results of operations. This information should be read in conjunction with the condensed consolidated financial statements and the notes thereto.

### Overview

Southland Holdings, Inc. (“Southland”) is a diverse leader in specialty infrastructure construction with roots dating back to 1900. The end markets for which we provide services cover a broad spectrum of specialty services within infrastructure construction. We design and construct projects in the following end markets: bridges, tunnels, communications, transportation and facilities, marine, steel structures, water and wastewater treatment, and water pipelines.

Southland is based in Grapevine, Texas. We are the parent company of Johnson Bros. Corporation, American Bridge Company, Oscar Renda Contracting, Southland Contracting, Mole Constructors, and Heritage Materials. With the combined capabilities of these six primary operating subsidiaries and their affiliates, Southland has become a diverse industry leader with both public and private customers.

#### Business Environment

Both our Civil and Transportation segments continue to identify new opportunities to grow our business, and the future outlook of the end markets we serve remains positive. Although risk and uncertainty exist, including, but not limited to, the items addressed within our forward-looking statements and risk factors, we believe that we are well positioned to compete on new infrastructure projects in both the public and private sectors. We believe that we have the operational excellence, reputation, and technical skill to continue to grow our business.

Our Civil segment operates throughout North America and specializes in services that include the design and construction of water pipeline, pump stations, lift stations, water and wastewater treatment plants, concrete and structural steel, outfall, and tunneling.

Our Transportation segment operates throughout North America and specializes in services that include the design and construction of bridges, roadways, marine, dredging, ship terminals and piers, and specialty structures and facilities. Our Transportation segment is responsible for the construction of bridges and structures including many of the most recognizable bridges, convention centers, sports stadiums, marine facilities, and ferris wheels in the world.

#### Market Trends and Uncertainties

In both our Transportation and Civil segments, we have competitors within the individual markets and geographic areas in which we operate, ranging from small, local companies to larger regional, national, and international companies. Although the construction business is highly competitive, there are few, if any, companies which compete in all of our market areas, both geographically and from an end market perspective. The degree and type of competition is influenced by the type and scope of construction projects within individual markets. Equipment ownership and ability to self-perform across numerous disciplines are two of our significant competitive advantages. These two advantages contribute to what sets us apart from our competition. We believe that the primary factors influencing competition in our industry are price, reputation for quality, safety, schedule certainty, relevant experience, availability of field supervision and skilled labor, machinery and equipment, financial strength, as well as knowledge of local markets and conditions. We believe that we can compete favorably in all of these factors.

Many of our competitors have the ability to perform work in either the private or public sectors. When opportunities for work in one sector are reduced, competitors tend to look for opportunities in the other sector. This migration has the potential to reduce revenue growth and/or increase pressure on gross profit margins.

We have seen an increase in demand for specialty construction projects in recent years at the federal, state, and local level. We anticipate the additional spending on infrastructure related to economic stimulus spending including the Infrastructure Investment and Jobs Act that was passed in 2021, and other federal, state, or local initiatives.

We believe that the combination of our experience, reputation, and technical expertise are unmatched among companies of our size. This combination of skills has allowed us to pursue complex projects with fewer competitors.

#### Seasonality, Cyclicality, and Variability

The results of our operations are subject to quarterly variations. Much of the variation is the result of weather, particularly rain, ice, snow, heat, wind, and named storms, which can impact our ability to perform construction activities. These weather impacts can affect revenue and profitability in either of our business segments. Any quarter can be affected either negatively or positively by atypical weather patterns in any part of North America, or other areas in which we operate. Traditionally, our first quarter is the most weather-affected; however, this may or may not necessarily be true in future periods.

Our business may also be affected by overall economic market conditions, including but not limited to declines in spending by project owners, delays in new projects, by changes in client schedules, or for other reasons.

### Key Business Metrics

#### Backlog

In our industry, backlog is an indicator of future revenue streams for work that has been awarded but not completed. We define backlog as a measure of the total amount of revenue remaining to be earned on projects that have been awarded. We only include a project in our backlog once we have an executed contract, or authorized notice to proceed. As a result, we believe our backlog is firm, although cancellations or scope adjustments may occur.

Backlog should not be considered a comprehensive indicator of future revenue as any of our contracts can be terminated by our customers on relatively short notice, and backlog does not include future work for which we may be awarded. In the event of a cancelation, we are typically reimbursed for all of our costs through a specific contractual date, as well as our costs to demobilize from the project site. Costs may include preconstruction and engineering services as well as that of our subcontractors. Our contracts do not typically grant us rights to revenue reflected in backlog. Projects may remain in backlog for extended periods of time as a result of schedule delays, regulatory requirements, project specific issues, or other reasons. Contract amounts from contracts where a transaction price cannot be reasonably estimated are not included within our backlog amount.

#### Other Non-GAAP Financial Measures

In addition to financial results determined in accordance with GAAP, in our industry, it is customary to manage our business using earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”). The Company will also utilize certain adjustments to EBITDA (“Adjusted EBITDA”), which may include but not be limited to certain non-cash charges, stock-based compensation, and other one-time income or expenses. EBITDA and Adjusted EBITDA assist management and our Board and may be useful to investors in comparing our operating performance consistently over time as it removes the impact of our capital structure and expenses that do not relate to our core operations.

### Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses earned and incurred, respectively, during the reporting period. Critical accounting estimates are fundamental to the portrayal of both our financial condition and results of operations and often require difficult, subjective, and complex estimates and judgments. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from the continuing changes in the economic environment will be reflected in the financial statements in future periods. With respect to our critical accounting policies and estimates, there have been no material developments or changes from the policies and estimates discussed in our annual disclosures.

More information about our accounting policies can be found in Note 2 of our audited financial statements, and Management’s Discussion and Analysis, for the year ended December 31, 2022 on our Current Report on Form 8-K, as originally filed with the SEC on February 14, 2023 and as subsequently amended on March 22, 2023.

### Recent Events

In the second quarter of 2023, Southland decided to discontinue certain types of projects in its Materials & Paving business line (“M&P”) and sold assets related to producing large scale concrete and asphalt. M&P is reported in the Transportation segment. In the third quarter of 2023, M&P contributed $47.8 million to revenue and ($11.3) million to gross profit. As of September 30, 2023, approximately 11% of Southland’s backlog was in M&P, and Southland estimates this work to be completed within the next two years.

### Results of Operations

The following table sets forth summary financial information for the three months ended September 30, 2023 and 2022:

*(Amounts in thousands)*

| ​ ​ | ​ ​ Three Months Ended September 30, 2023 | ​ | ​ ​ September 30, 2022 |
| --- | ---: | --- | ---: |
| Revenue | $312,472 | ​ | $335,125 |
| Cost of construction | 282,943 | ​ | 272,715 |
| **Gross profit** | 29,529 | ​ | 62,410 |
| Selling, general, and administrative expenses | 15,247 | ​ | 15,606 |
| **Operating income** | 14,282 | ​ | 46,804 |
| Loss on investments, net | (21) | ​ | (100) |
| Other income, net | 2,151 | ​ | 2,292 |
| Interest expense | (6,231) | ​ | (2,285) |
| **Income before income taxes** | 10,181 | ​ | 46,711 |
| Income tax expense | 5,390 | ​ | 10,588 |
| **Net income** | 4,791 | ​ | 36,123 |
| Net income attributable to noncontrolling interests | 991 | ​ | 924 |
| **Net income attributable to Southland Stockholders** | $3,800 | ​ | $35,199 |

#### Revenue

Revenue for the three months ended September 30, 2023, was $312.5 million, a decrease of $22.7 million, or 6.8%, compared to the three months ended September 30, 2022. The decrease was primarily attributable to a decrease in revenue in our Transportation segment, partially offset by an increase in revenue in our Civil segment.

#### Cost of construction

Cost of construction for the three months ended September 30, 2023, was $282.9 million, an increase of $10.2 million, or 3.8%, compared to the three months ended September 30, 2022. The increase was primarily attributable to an $15.7 million increase in our Civil segment, partially offset by a $5.5 million decrease in our Transportation segment.

#### Gross profit

Gross profit for the three months ended September 30, 2023, was $29.5 million, a decrease of $32.9 million, or 52.7%, compared to the three months ended September 30, 2022. The decrease was primarily attributable to activity related to the M&P business line discussed in the Recent Events section and progress completions in our Transportation segment.

#### Selling, general, and administrative costs

Selling, general, and administrative costs for the three months ended September 30, 2023, were $15.2 million, a decrease of $0.4 million, or 2.3%, compared to the three months ended September 30, 2022. The decrease was related to a decrease in professional fees of $1.1 million; partially offset by a $0.3 million increase in costs of becoming a public company and $0.6 million increase in salaries.

#### Loss on investments, net

Loss on investments, net for the three months ended September 30, 2023, was $0.0 million compared to $0.1 million loss on investments, net for the three months ended September 30, 2022.

#### Interest expense

Interest expense for the three months ended September 30, 2023, was $6.2 million, an increase of $3.9 million, or 172.7%, compared to the three months ended September 30, 2022. The difference is primarily driven by an increase in external borrowings compared to the prior year and higher interest rates on the additional borrowings. We also experienced increased borrowing costs on our revolving line of credit compared to the same period in 2022.

#### Income tax expense

Income tax expense for the three months ended September 30, 2023, was $5.4 million, or an effective rate of 52.9%. The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, the inclusion of foreign sourced income within U.S. taxable income through GILTI, and the impact of worldwide forecast revisions on the interim calculation under ASC 740.

Income tax expense for the three months ended September 30, 2022, was $10.6 million, or an effective rate of 22.7%. The primary differences between the statutory rate and the effective rate were due to state income taxes and a valuation allowance recorded on American Bridge’s U.S. and state net deferred tax assets, offset with inclusion of earnings from certain filing entities being taxed as pass-through entities and a lower effective rate on overall foreign earnings.

The following table sets forth summary financial information for the nine months ended September 30, 2023 and 2022:

*(Amounts in thousands)*

| ​ ​ | ​ ​ Nine Months Ended September 30, 2023 | ​ | ​ ​ September 30, 2022 |
| --- | ---: | --- | ---: |
| Revenue | $844,228 | ​ | $866,627 |
| Cost of construction | 829,550 | ​ | 761,549 |
| **Gross profit** | 14,678 | ​ | 105,078 |
| Selling, general, and administrative expenses | 47,266 | ​ | 43,395 |
| **Operating income (loss)** | (32,588) | ​ | 61,683 |
| Loss on investments, net | (3) | ​ | (79) |
| Other income, net | 23,559 | ​ | 936 |
| Interest expense | (13,790) | ​ | (6,317) |
| **Income (loss) before income taxes** | (22,822) | ​ | 56,223 |
| Income tax expense (benefit) | (11,446) | ​ | 13,745 |
| **Net income (loss)** | (11,376) | ​ | 42,478 |
| Net income attributable to noncontrolling interests | 2,314 | ​ | 1,474 |
| **Net income (loss) attributable to Southland Stockholders** | $(13,690) | ​ | $41,004 |

#### Revenue

Revenue for the nine months ended September 30, 2023, was $844.2 million, a decrease of $22.4 million, or 2.6%, compared to the nine months ended September 30, 2022. The decrease was primarily attributable to a decrease in revenue in our Transportation segment, partially offset by an increase in revenue in our Civil segment.

#### Cost of construction

Cost of construction for the nine months ended September 30, 2023, was $829.6 million, an increase of $68.0 million, or 8.9%, compared to the nine months ended September 30, 2022. The increase was primarily attributable to an $9.1 million increase in our Civil segment and an $58.9 million increase in our Transportation segment.

#### Gross profit

Gross profit for the nine months ended September 30, 2023, was $14.7 million, a decrease of $90.4 million, or 86.0%, compared to the nine months ended September 30, 2022. The decrease was primarily attributable to activity related to the M&P business line discussed in the Recent Events section and progress completions in our Transportation segment.

#### Selling, general, and administrative costs

Selling, general, and administrative costs for the nine months ended September 30, 2023, were $47.3 million, an increase of $3.9 million, or 8.9%, compared to the nine months ended September 30, 2022. The increase was related to an increase of $1.8 million increase in costs of becoming a public company and $2.6 million increase in salaries; partially offset by $1.3 million decrease in professional fees.

#### Loss on investments, net

Loss on investments, net for nine months ended was $0.0 million compared to $0.1 million loss on investments, net for the nine months ended September 30, 2022.

#### Interest expense

Interest expense for the nine months ended September 30, 2023, was $13.8 million, an increase of $7.5 million, or 118.3%, compared to the nine months ended September 30, 2022. The difference is primarily driven by an increase in external borrowings compared to the prior year and higher interest rates on the additional borrowings. We also experienced increased borrowing costs on our revolving line of credit compared to the same period in 2022.

#### Income tax expense (benefit)

Income tax benefit for the nine months ended September 30, 2023, was $11.4 million, or an effective rate of 50.1%. The primary differences from the federal statutory tax rate of 21% was driven by state income taxes, the release of the valuation allowance recorded on American Bridge’s U.S. and state net deferred tax assets, permanent book to tax difference related to earnouts and GILTI, a lower effective rate on overall foreign earnings, and elections made by various subsidiaries to voluntarily revoke their S-corporation status effective January 1, 2023.

Income tax expense for the nine months ended September 30, 2022, was $13.7 million, or an effective rate of 24.4%. The primary differences between the statutory rate and the effective rate were due to state income taxes and a valuation allowance recorded on American Bridge’s U.S. and state net deferred tax assets, offset with inclusion of earnings from certain filing entities being taxed as pass-through entities and a lower effective rate on overall foreign earnings.

### Segment Results

The following table sets forth segment information for the three months ended September 30, 2023 and 2022:

*(Amounts in thousands)*

| ​ ​ ​ Segment | ​ ​ Three Months Ended September 30, 2023 ​ ​ Revenue | ​ ​ ​ % of Total ​ Revenue ​ | ​ ​ September 30, 2022 ​ ​ Revenue | ​ ​ ​ % of Total ​ Revenue |
| --- | ---: | ---: | ---: | ---: |
| Civil | $90,708 | 29.0% | $71,409 | 21.3% |
| Transportation | 221,764 | 71.0% | 263,716 | 78.7% |
| Total revenue | $312,472 | 100.0% | $335,125 | 100.0% |

*(Amounts in thousands)*

| ​ ​ ​ Segment | ​ ​ Three Months Ended September 30, 2023 ​ ​ Gross Profit | ​ ​ ​ ​ % of Segment Revenue ​ | ​ ​ September 30, 2022 ​ ​ Gross Profit | ​ ​ ​ % of Segment Revenue ​ |
| --- | ---: | ---: | ---: | ---: |
| Civil | $12,465 | 13.7% | $8,926 | 12.5% |
| Transportation | 17,064 | 7.7% | 53,484 | 20.3% |
| Gross profit | $29,529 | 9.5% | $62,410 | 18.6% |

#### Civil

Revenue for the three months ended September 30, 2023, was $90.7 million, an increase of $19.3 million, or 27.0%, compared to the three months ended September 30, 2022. This was primarily attributable to increased revenues of $30.3 million for the three months ended September 30, 2023 versus the same period in 2022, from new projects started in 2023. These increases were offset by decreased revenues of $5.9 million and $5.3 million from a water line project in the Midwest that was completed earlier this year and plant project on the east coast approaching completion, respectively, for the three months ended September 30, 2023 versus the same period in 2022.

Gross profit for the three months ended September 30, 2023, was $12.5 million, or 13.7% of segment revenue, compared to $8.9 million, or 12.5% of segment revenue, for the three months ended September 30, 2022. The primary contributions to the increase of $3.5 million were increased profit of $8.6 million for the three months ended September 30, 2023 versus the same period in 2022, from new projects started in 2023. These increases were offset by decreased profit of $3.7 million and $1.0 million from a water line project in the Midwest that was completed earlier this year and plant project on the east coast approaching completion, respectively, for the three months ended September 30, 2023 versus the same period in 2022.

#### Transportation

Revenue for the three months ended September 30, 2023, was $221.8 million, a decrease of $42.0 million, or 15.9%, compared to the three months ended September 30, 2022. The decrease was primarily attributable to decreased revenues of $17.1 million as we completed projects in M&P, and $57.3 million as we made progress completing the takeover work related to the American Bridge acquisition, in the three months ended September 30, 2023 versus the same period in 2022. These decreases were offset by increased volume on a project in the Bahamas of $27.5 million in the three months ended September 30, 2023 versus the same period in 2022.

Gross profit for the three months ended September 30, 2023, was $17.1 million, or 7.7% of segment revenue, compared to gross profit of $53.5 million, or 20.3% of segment revenue, for the three months ended September 30, 2022. The primary contributions to the decrease of $36.4 million for the three months ended September 30, 2023 versus the same period in 2022 were decreases in profitability of $3.7 million in M&P, and $29.2 million as we make progress completing the takeover work related to the American Bridge acquisition.

The following table sets forth segment information for the nine months ended September 30, 2023 and 2022:

*(Amounts in thousands)*

| ​ ​ ​ Segment | ​ ​ Nine Months Ended September 30, 2023 ​ ​ Revenue | ​ ​ ​ % of Total ​ Revenue ​ | ​ ​ September 30, 2022 ​ ​ Revenue | ​ ​ ​ % of Total ​ Revenue |
| --- | ---: | ---: | ---: | ---: |
| Civil | $229,264 | 27.2% | $221,303 | 25.5% |
| Transportation | 614,964 | 72.8% | 645,324 | 74.5% |
| Total revenue | $844,228 | 100.0% | $866,627 | 100.0% |

*(Amounts in thousands)*

| ​ ​ ​ Segment | ​ ​ Nine Months Ended September 30, 2023 ​ ​ Gross Profit | ​ ​ ​ ​ % of Segment Revenue ​ | ​ ​ September 30, 2022 ​ ​ Gross Profit | ​ ​ ​ % of Segment Revenue ​ |
| --- | ---: | ---: | ---: | ---: |
| Civil | $27,137 | 11.8% | $28,315 | 12.8% |
| Transportation | (12,459) | (2.0)% | 76,763 | 11.9% |
| Gross profit | $14,678 | 1.7% | $105,078 | 12.1% |

#### Civil

Revenue for the nine months ended September 30, 2023, was $229.3 million, an increase of $8.0 million, or 3.6%, compared to the nine months ended September 30, 2022. This was primarily attributable to increased revenues of $54.5 million for the nine months ended September 30, 2023 versus the same period in 2022, from new projects started in 2023. These increases were offset by decreased revenues of $5.6 million, $28.1 million, and $15.6 million from a water line project in the Midwest that was completed earlier this year, two plant projects on the east coast approaching completion, and lower activity related to a tunnel project in Texas, respectively, for the nine months ended September 30, 2023 versus the same period in 2022.

Gross profit for the nine months ended September 30, 2023, was $27.1 million, or 11.8% of segment revenue, compared to $28.3 million, or 12.8% of segment revenue, for the nine months ended September 30, 2022. The primary contributions to the decrease of $1.2 million for the nine months ended September 30, 2023 versus the same period in 2022 were decreases in profit contributions of $3.9 million, $4.1 million, and $5.3 million from a water line project in the

Midwest that was completed earlier this year, two plant projects on the east coast approaching completion, and lower activity related to a tunnel project in Texas, respectively. Offsetting these decreases was an increase in profit contribution of $13.0 million from new projects started in 2023.

#### Transportation

Revenue for the nine months ended September 30, 2023, was $615.0 million, a decrease of $30.4 million, or 4.7%, compared to the nine months ended September 30, 2022. The decrease was primarily attributable to decreased contributions during the nine months ended September 30, 2023, of $88.4 million as we make progress completing the takeover work related to the American Bridge acquisition and $51.2 million from M&P. The decrease was offset by increases for the nine months ended September 30, 2023, versus the same period in 2022, of $85.8 million from a project in the Bahamas and $30.3 million from a new bridge project start in Florida.

Gross loss for the nine months ended September 30, 2023, was $12.5 million, or (2.0%) of segment revenue, compared to gross profit of $76.8 million, or 11.9% of segment revenue, for the nine months ended September 30, 2022. The primary contributions to the decrease of $89.2 million for the nine months ended September 30, 2023, versus the same period in 2022 were decreases of $41.4 million from M&P, and $37.8 million as we make progress completing the takeover work related to the American Bridge acquisition. Offsetting these decreases was an increase in profit contribution of $5.6 million from a new bridge project start in Florida for the nine months ended September 30, 2023 versus the same period in 2022.

### Adjusted EBITDA Reconciliation

In our industry, it is customary to manage our business using Adjusted EBITDA. Below is a reconciliation of net income to Adjusted EBITDA.

*(Amounts in thousands)*

| ​ ​ | ​ ​ Three Months Ended September 30, 2023 | ​ ​ | ​ ​ September 30, 2022 | ​ ​ ​ | ​ ​ Nine Months Ended September 30, 2023 | ​ ​ | ​ ​ September 30, 2022 |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Net income (loss) attributable to Southland Stockholders | $3,800 | ​ | $35,199 | ​ | $(13,690) | ​ | $41,004 |
| Depreciation and amortization | 7,968 | ​ | 11,523 | ​ | 24,704 | ​ | 35,163 |
| Income taxes expense (benefit) | 5,390 | ​ | 10,588 | ​ | (11,446) | ​ | 13,745 |
| Interest expense | 6,231 | ​ | 2,285 | ​ | 13,790 | ​ | 6,317 |
| Interest income | (1,060) | ​ | (18) | ​ | (1,358) | ​ | (29) |
| EBITDA | ​ 22,329 | ​ | ​ 59,577 | ​ | ​ 12,000 | ​ | ​ 96,200 |
| Transaction related costs | ​ — | ​ | ​ — | ​ | ​ 1,594 | ​ | ​ — |
| Contingent earnout consideration non-cash expense reversal | ​ — | ​ | ​ — | ​ | ​ (20,689) | ​ | ​ — |
| Adjusted EBITDA | $22,329 | ​ | $59,577 | ​ | $(7,095) | ​ | $96,200 |

Adjusted EBITDA for the three months ended September 30, 2023, decreased to $22.3 million from $59.6 million compared to the three months ended September 30, 2022, due primarily to activity related to the M&P business line discussed in the Recent Events section and the decrease of net income.

Adjusted EBITDA for the nine months ended September 30, 2023, decreased to negative $7.1 million from $96.2 million compared to the nine months ended September 30, 2022, due primarily to activity related to the M&P business line discussed in the Recent Events section and the reversal of contingent earnout consideration.

### Liquidity, Capital Commitments and Resources

Our principal sources of liquidity are cash generated from operations, funds from borrowings, and existing cash on hand. Our principal uses of cash typically include the funding of working capital obligations, debt service, and investment in machinery and equipment for our projects.

In connection with the closing of the Business Combination, holders of 25,296,280 shares of common stock, or 91.7% of the shares with redemption rights, exercised their right to redeem their shares at a redemption price of $10.30 per share. As a result, a substantial portion of the cash proceeds from our initial public offering we received in connection with the Business Combination were not available to us after giving effect to the Business Combination. Prior to the closing of the Business Combination, we planned to use the cash acquired in the Business Combination (i) to fund organic growth with increased working capital, (ii) to fund future potential acquisitions, and (iii) for general corporate needs including paying down debt. In light of the high level of redemptions, we may seek cash from (x) increasing institutional borrowings or increase the amount of our revolving loan, (y) selling off unused or underutilized construction assets, or (z) expediting or sell our claim settlements. However, we do not believe that the limited cash proceeds received in connection with the Business Combination will have a materially adverse impact on our operations or financial position.

We will receive the proceeds from any exercise of any Warrants for cash. We believe the likelihood that Warrant holders will exercise their Warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our common stock. On November 9, 2023, the closing price of our common stock was $5.65 per share. To the extent the market price of our common stock remains below the exercise price of $11.50 per share, we believe that Warrant holders will be unlikely to exercise their Warrants for cash, resulting in little or no cash proceeds to us for any such exercise. To the extent we receive any cash proceeds, we expect to use such proceeds for general corporate and working capital purposes, which would increase our liquidity. However, we do not expect to rely materially on the cash exercise of Warrants to fund our operations.

Based on historical and anticipated future operating results, we believe cash flow from operations, available cash, amounts available to us under the revolving credit agreement, and other financing will be adequate to meet our liquidity needs for at least the next twelve months, including any anticipated requirements for working capital, capital expenditures, and scheduled debt service.

Our current and future liquidity is greatly dependent upon our operating results, which are largely determined by overall economic conditions and our current contracts and backlog. Our liquidity could be adversely affected by a disruption in the availability of credit. If such a material adverse event were to occur, we may be unable to borrow under our revolving credit agreement or may be required to seek additional financing. In addition, we may be required to seek additional financing to refinance all or a significant portion of our existing debt on or prior to maturity. We may also seek to access the public or private equity markets to support our liquidity whenever conditions are favorable to us. There can be no assurance that we will be able to raise additional capital or obtain additional financing when needed or on terms that are favorable to us.

We previously included projected financial information regarding Southland LLC for fiscal years 2022, 2023 and 2024 in the proxy statement/prospectus filed with the SEC on February 1, 2023 (the “Business Combination Prospectus”) in connection with the proposed Business Combination. Southland LLC provided Legato II with certain initial forecasted financial information prior to entering into the Merger Agreement (the “Initial Forecasted Financial Information”). Southland LLC subsequently realized lower revenues, lower costs, and higher gross margin performance through September 30, 2022 than initially anticipated, and Southland LLC provided updated certain forecasted financial information to Legato II in October 2022 (the “Updated Forecasted Financial Information,” and together with the Initial Forecasted Financial Information, the “Forecasted Financial Information”). The Forecasted Financial Information was prepared solely for internal use for various purposes, including for Legato II’s board of directors to assess the Business Combination and for workforce staffing, resource allocation and other management objectives, is subjective in many respects and is therefore susceptible to varying interpretations and the need for periodic revision based on actual experience and business developments. The Forecasted Financial Information was not intended to be looked upon as “guidance” of any sort and was not intended for third-party use, including by investors or holders. The Forecasted Financial Information was based on numerous variables and assumptions made by Legato II and Southland LLC management at the time and prepared with respect to matters specific to the Business Combination. The Forecasted Financial Information was not based on Public Company Accounting Oversight Board compliant audited financials.

For the fiscal year ended December 31, 2022, our revenue was approximately $1,161.4 million, which was below our projected revenue for fiscal year ended December 31, 2022 of $1,520.0 million contained in the Initial Forecasted Financial Information and $1,200.0 million contained in the Updated Forecasted Financial Information, primarily due to the timing of completion of certain projects. For the fiscal year ended December 31, 2022, our EBITDA was approximately $128.3 million, which was below our projected EBITDA for fiscal year ended December 31, 2022 of $135.0 million contained in both the Initial Forecasted Financial Information and the Updated Forecasted Financial Information, primarily due to lower than anticipated revenues due to the timing of completion of certain projects. Our actual revenue and EBITDA being lower than projected revenue and EBITDA had a negative impact on our cash and cash equivalents position. However, we do not believe that it is expected to have a materially adverse impact on our operations or financial position.

We are exposed to market risks relating to fluctuations in interest rates and currency exchange risks. Significant changes in market conditions could cause interest rates to increase and have a material impact on the financing needed to operate our business.

The following table sets forth summary change in cash, cash equivalent and restricted cash for the nine months ended September 30, 2023 and 2022:

*(Amounts in thousands)*

| ​ ​ | ​ ​ Nine Months Ended September 30, 2023 | ​ | ​ ​ September 30, 2022 | ​ ​ |
| --- | ---: | --- | ---: | --- |
| Net cash used in operating activities | $(36,588) | ​ | $(70,936) | ​ |
| Net cash used in investing activities | (507) | ​ | (311) | ​ |
| Net cash provided by financing activities | 11,730 | ​ | 15,695 | ​ |
| Effect of exchange rate changes | 126 | ​ | 1,834 | ​ |
| Net change in cash, cash equivalents, and restricted cash | $(25,239) | ​ | $(53,718) | ​ |

Net cash used in operating activities was $36.6 million during the nine months ended September 30, 2023, compared to $70.9 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the primary differences in cash used in operating activities compared to the nine months ended September 30, 2022, were increases in accounts payable of $27.6 million, increases in contract liabilities of $82.6 million and decreases in contract assets of $68.3 million, which were partially offset by reversal of net income to net loss by $53.9 million and increases in accounts receivables of $45.3 million.

Net cash used in investing activities was $0.5 million during the nine months ended September 30, 2023, compared to $0.3 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the primary difference in cash used in investing activities compared to the nine months ended September 30, 2022, was an increase in proceeds from sale of fixed assets of $3.6 million, which were partially offset by increases in purchase of fixed assets of $3.1 million and decreases in proceeds from the sale of trading securities of $0.8 million.

Net cash provided by financing activities was $11.7 million for the nine months ended September 30, 2023 compared to $15.7 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the primary difference in cash provided by financing activities compared to the nine months ended September 30, 2022, was a decrease of $52.0 million in borrowing on a line of credit, an increase of $8.0 million of payments on line of credit and an increase of $80.7 million of payments on notes payable, which was offset by the $17.1 million in proceeds from the Merger and an increase of $115.2 million in borrowing on notes payable.

As of September 30, 2023, we had long-term debt of $309.1 million, of which $47.8 million is due within the next twelve months.

#### Revolving Credit Facility

In July 2021, we entered into a revolving credit agreement with Frost Bank for $50.0 million. As of December 31, 2022, the revolving credit facility agreement had been amended and increased to $100.0 million. In August 2023, the revolving line of credit was extended through January 15, 2025 and we incurred $0.3 million as deferred financing cost. The revolving credit facility agreement bears interest on drawn balances at 1-month SOFR, subject to a floor of 0.90%, plus an applicable margin rate of 2.10%. As of September 30, 2023, $90.0 million was drawn on the revolver, and we had $10.0 million available.

#### Secured Notes

We enter into secured notes in order to finance growth within our business. In July 2023, we refinanced approximately $76.4 million of existing secured notes in exchange for a new equipment note in the amount of $113.5 million. The new equipment note is secured by specific construction equipment assets and has a five-year fully amortizing term at a fixed rate of 7.25%. We incurred $0.3 million as deferred financing cost and $0.6 million as bank service charges in connection with the refinancing. As of September 30, 2023, we had outstanding secured notes scheduled to expire between November 2023 and March 2033. Interest rates on the secured notes range between 1.29% and 8.00%.

#### Mortgage Notes

We also enter into mortgage notes in order to finance growth within our business. As of September 30, 2023, we had outstanding mortgage notes scheduled to expire between October 2023 and February 2029. Interest rates on the mortgage notes range between 3.84% and 5.99%.

#### Equipment OEM Notes

We enter into equipment notes in order to complete certain specialty construction projects. As of September 30, 2023, we did not have any outstanding equipment OEM notes that are collateralized by certain equipment owned by Southland.

### Backlog

We define backlog as a measure of the total amount of revenue remaining to be earned on projects that have been awarded. We only include a project in our backlog once we have an executed contract, or authorized notice to proceed. As a result, we believe our backlog is firm, although cancellations or scope adjustments may occur.

In our industry, backlog is an indicator of future revenue streams for work that has been awarded but not completed. We define backlog as anticipated revenue from the uncompleted portion of existing contracts and therefore can be estimated.

*(Amounts in thousands)*

| ​ | ​ ​ Backlog |
| --- | ---: |
| **Balance December 31, 2022** | $2,973,886 |
| New contracts, change orders, and adjustments | 412,756 |
| Gross backlog | 3,386,642 |
| Less: contract revenue recognized in 2023 | (845,323) |
| **Balance September 30, 2023** | $2,541,319 |

Backlog should not be considered a comprehensive indicator of future revenue as any of our contracts can be terminated by our customers on relatively short notice, and backlog does not include future work for which we may be awarded or new awards for which we are awaiting an executed contract or authorized notice to proceed. In the event of a cancelation, we are typically reimbursed for all of our costs through a specific contractual date, as well as our costs to demobilize from the project site. Our contracts do not typically grant us rights to revenue reflected in backlog. Projects may remain in backlog for extended periods of time as a result of schedule delays, regulatory requirements, project specific issues, or other reasons. Contract amounts from contracts where a transaction price cannot be reasonably estimated may not be included within our backlog amount.

#### Segment Backlog

Below is our Backlog by segment.

#### Transportation

*(Amounts in thousands)*

| ​ | ​ ​ Backlog |
| --- | ---: |
| **Balance December 31, 2022** | $2,213,723 |
| New contracts, change orders, and adjustments | 356,038 |
| Gross backlog | 2,569,761 |
| Less: contract revenue recognized in 2023 | (620,673) |
| **Balance September 30, 2023** | $1,949,088 |

#### Civil

*(Amounts in thousands)*

| ​ | ​ ​ Backlog |
| --- | ---: |
| **Balance December 31, 2022** | $760,163 |
| New contracts, change orders, and adjustments | 56,717 |
| Gross backlog | 816,880 |
| Less: contract revenue recognized in 2023 | (224,649) |
| **Balance September 30, 2023** | $592,231 |

## Controls and procedures

As filed, 2,249 characters.

#### Evaluation of Disclosure Controls and Procedures

It is management’s responsibility to establish and maintain adequate disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the company’s principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and our Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report. Following this review and evaluation, our management determined that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

#### Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2023 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 11,722 characters.

Other than as set forth below, there have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed under “Item 1A. Risk Factors” to Part I of our Annual Report on Form 10-K as of the fiscal year ended December 31, 2022.

***Sales of our common stock, or the perception of sales of our common stock, by the Company or our stockholders in the public market, including pursuant to the prospectus contained in our Registration Statement on Form S-1 (File No. 333-271057) (the “Registration Statement”), could cause the market price of our securities to decline, and certain of the selling securityholders named in the prospectus contained in the Registration Statement (the “Selling Securityholders”) may still experience a significant return on investment.***

If we or our stockholders sell or indicate an intention to sell substantial amounts of our securities in the public market, including through sales pursuant to the prospectus contained in the Registration Statement, the trading price of our securities could decline. In addition, shares underlying any outstanding options and restricted stock units will become eligible for sale if exercised or settled, as applicable, to the extent permitted by the provisions of various vesting agreements and Rule 144 of the Securities Act. All the shares of common stock reserved for issuance under our equity incentive plan have been registered on Form S-8 under the Securities Act and will be eligible for sale in the public markets, subject to Rule 144 limitations applicable to affiliates. If these shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Although the stockholders of Legato II prior to Legato II’s initial public offering (the “Initial Stockholders”) and certain Southland Members are subject to certain restrictions regarding the transfer of their shares of common stock, these shares may be sold after the expiration of their respective lock-ups. As restrictions on transfer have expired, the market price of our common stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

In connection with the closing of the Business Combination, holders of 25,296,280 shares of common stock, or 91.7% of the shares with redemption rights, exercised their right to redeem their shares. The shares of common stock being offered for resale pursuant to the prospectus contained in the Registration Statement by the Selling Securityholders represent approximately 88% of potential shares outstanding (which includes in the denominator, shares outstanding, shares reserved for issuance upon exercise of the Warrants, shares earned for hitting certain targets outlined in the Merger Agreement, and shares reserved for issuance under equity incentive plans) as of April 27, 2023. Given the substantial number of shares of common stock being registered for potential resale by Selling Securityholders pursuant to the prospectus contained in the Registration Statement, the sale of shares by the Selling Securityholders, or the perception in the market that the Selling Securityholders of a large number of shares intend to sell shares, could cause the trading price of our securities could decline.

In addition, some of our Selling Securityholders acquired the securities being registered for resale pursuant to the prospectus contained in the Registration Statement at prices significantly lower than the per unit purchase price paid by public stockholders in our initial public offering of $10.00 per unit. As a result, despite the decline in the public trading price since our initial public offering, some of the Selling Securityholders may still experience a positive return on investment and may have an incentive to sell shares of our common stock. For example, the Initial Stockholders purchased 5,750,000 shares of common stock prior to our initial public offering at $0.005 per share and subsequently acquired 1,150,000 additional shares for no additional consideration as a result of a stock dividend of 0.2 shares for each share outstanding. In addition, EarlyBirdCapital, Inc. acquired 200,000 shares of common stock at $0.0001 per share and subsequently acquired 40,000 additional shares for no additional consideration as a result of a stock dividend of 0.2 shares for each share outstanding. By way of example only, if all 5,750,000 shares of common stock originally issued to the Initial Stockholders were sold at a price of $5.65 per share, which was the closing price of our common stock as reported on NYSE on November 9, 2023, the Initial Stockholders would experience a gain equal to $5.65 per share. Investors in our initial public offering who acquired shares of common stock in connection with the purchase of units at $10.00 per unit would not be expected to experience a similar return on investment.

### The Warrants may never be in the money, and may expire worthless.

We believe the likelihood that Warrant holders will exercise their Warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our common stock. On November 9, 2023, the closing price of our common stock was $5.65 per share. To the extent the market price of our common stock remains below the exercise price of $11.50 per share, we believe that Warrant holders will be unlikely to exercise their Warrants for cash, resulting in little or no cash proceeds to us for any such exercise. There is no way to ensure that the market price of our common stock will exceed the exercise price of the Warrants following the time they become exercisable and prior to their expiration. As a result, the Warrants may expire worthless, and we may not receive any proceeds from the exercise of the Warrants.

***If we do not file and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the Warrants, holders will only be able to exercise such Warrants on a “cashless basis.”***

If we do not file and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the Warrants at the time that holders wish to exercise such Warrants, they will only be able to exercise them on a “cashless basis” provided that an exemption from registration is available. As a result, the number of shares of common stock that holders will receive upon exercise of the Warrants will be fewer than it would have been had such holder exercised his Warrant for cash. Further, if an exemption from registration is not available, holders would not be able to exercise on a cashless basis and would only be able to exercise their Warrants for cash if a current and effective prospectus relating to the common stock issuable upon exercise of the warrants is available. Under the terms of the Warrant Agreement with American Stock Transfer & Trust Company, as warrant agent, we have agreed to use our best efforts to meet these conditions and to file and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the Warrants until the expiration of the Warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential “upside” of the holder’s investment in our company may be reduced or the Warrants may expire worthless.

***An investor will only be able to exercise a Warrant if the issuance of shares of common stock upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the Warrants.***

No Warrants will be exercisable and we will not be obligated to issue shares of Common Stock unless the shares of common stock issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Warrants. If the shares of common stock issuable upon exercise of the Warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the Warrants may be deprived of any value, the market for the Warrants may be limited and they may expire worthless if they cannot be sold.

***We may amend the terms of the Warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority of the then outstanding Warrants.***

Our Warrants have been issued in registered form under the Warrant Agreement between American Stock Transfer & Trust Company, as warrant agent, and us. The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The Warrant Agreement requires the approval by the holders of at least a majority of the then outstanding Warrants in order to make any change that adversely affects the interests of the registered holders.

***We may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.***

We have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within a 30 trading-day period commencing at any time after the Warrants become exercisable and ending on the third business day prior to proper notice of such redemption provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the Warrants, we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Warrants and a current prospectus relating to them is available. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Warrants could force you (i) to exercise your Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of your Warrants.

***Our management’s ability to require holders of our Warrants to exercise such Warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the Warrants than they would have received had they been able to exercise their Warrants for cash.***

If we call our Warrants for redemption after the redemption criteria described elsewhere in this Quarterly Report have been satisfied, our management will have the option to require any holder that wishes to exercise his Warrant (including any Private Warrants) to do so on a “cashless basis.” If our management chooses to require holders to exercise their Warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his Warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in the Company.

Filed Nov 13, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-018856. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.